Can Facebook win a bigger share of the Russian social media pie?

Can Facebook win a bigger share of the Russian social media pie?

As Facebook celebrates its 10th anniversary, Russia Direct
analyzes the challenges the company faces in Russia.

On February 4, 2014 Facebook, the most popular social network
in the world turns 10 years old. With 1.23 billion users around the world,
the company is worth $150 billion, a global record for
an internet company.

Despite dominating markets all over the world, however, Facebook
is visibly less popular in Russia than local social media.
So why exactly has Facebook been unable to replicate its stunning
successes in Russia, and what are the challenges it faces
in expanding its market share?

The global social networking boom began in 2003 with the launch
of MySpace and LinkedIn, followed by Facebook in 2004. Russia
caught the social media bug itself two years later in 2006, when homegrown
online networks as Odnoklassniki and Vkontakte first appeared — well
before any of the U.S. social networks were on most Russians’
radar.

In 2008, by now keen to make inroads into the Russian market,
Facebook introduced a Russian interface. Russia was to serve
as a test case for Facebook, which sought to raise its profile
in countries that are important commercially but have a heavily
regulated media landscape. According to Facebook founder and CEO Mark
Zuckerberg, Russia was supposed to be the starting point for
an eastern drive that would eventually expand the company’s presence
in the Chinese market, which is the largest in the world
in terms of internet users.

Perhaps unsurprisingly, Russia is now Europe’s largest internet
market, with a total of 78 million citizens online. However, Russians
are also the most socially engaged internet users in Europe, with 82
percent of Russians having an account on at least one
social network, according to the latest statistics from WCIOM public
opinion poll. Russians spend an average of 12.8 hours per month
on social networks — the world record; the global average is 5.7
hours.

But Russian social media space is unique in terms of its
language, culture, user preferences and government regulations. The Russian
market is dominated by local players — for example, Google,
which leads most Western markets, trails Yandex, a Russian search engine.
Vkontakte is the leader among social media, with 30 million users,
followed by Odnoklassniki, with 28 million (versus 9 million
on Facebook, according to Amarena Corp). Vkontakte and Facebook are
popular among the younger generation, while Odnoklassniki.ru is the
destination of choice for older users.

Since Facebook introduced its Russian interface, it has been rapidly
gaining Russian users and traffic. From January to August 2010, its
Russian audience increased by up to 376 percent, reaching 4.5
million. Russian Facebook users are primarily Moscow-based IT,
PR, marketing and media
professionals for whom the network is a way of keeping
in touch with international friends. But this is a rather
a narrow group, and despite this progress, Facebook has now reached
a plateau. It also still lags behind its Russian competitors
in time spent on the site, with its users spending an average
of three minutes on the site daily, compared with average of 20
minutes daily spent by Russians on social media websites
in general.

Unlike China, where the site is blocked due to state censorship,
Russia imposes no barriers to Facebook’s growth. Its relatively
low popularity is a result of competitive market conditions.

Vkontakte, the dominant player on the Russian online market, has
a number of features which give it a significant advantage
over Facebook. Firstly, it allows its users to watch movies and
listen to music for free — something Facebook is not able
to do, as much of this content is illegal.
In addition, it is possible to upload and download video
and audio files via the VK Tracker application. Not only do these
features continue to attract new members to the site, they also
encourage users to spend more time online. Many users keep Vkontakte
on in the background during their internet sessions, listening
to streaming music.

This situation is unlikely to change even in the event
of a successful conclusion to the campaign against pirate
content that began in Russia after its accession to the WTO
in 2012. Most Russians are highly likely to remain loyal
to Vkontakte due to user inertia and its easy and
user-friendly features as a communication tool.

Facebook’s key advantage in this contest is global outreach.
Though the interface and applications of Vkontakte are very similar
to those of its rival, meaning both offer convenient platforms for
social interaction, Vkontakte is used primarily
by a Russian-speaking audience and, though it may
develop into a strong Eurasian presence, is unlikely to become
global. So in this respect Facebook will retain users interested
in maintaining global connections.

But there are also political conditions shaping Facebook’s future
in Russia. The country is no China, but in Russia, which
promotes the idea of a ‘sovereign’ or ‘independent’ internet,
U.S.-based social media is seen by some as a potential
threat to cultural integrity and regime stability.

Therefore in Russia cyberspace and social media are seen
as a matter of national security. Russia’s state policy
on international information security until 2020, adopted in 2013,
mentions «interference into the internal politics of sovereign states,
disturbing the peace and public order» … with IT technologies. In the
light of the events of the Arab Spring, labelled by some media
as the «Twitter Revolution’ or «Facebook Revolution», the implication
is that social media are being treated as possible coordinating
platforms for social uprisings.

Former NSA contractor and CIA agent Edward Snowden’s revelations that
major internet companies cooperated with the U.S. government to carry out
widespread data mining and surveillance have only increased concerns among
Russian authorities about the possible use of Facebook as a tool
for exerting foreign influence on Russia’s internet users.

But Facebook seems interested in keeping its position on the
Russian market and has proved to be ready to cooperate with
Russian officials and business, thus overcoming potential political barriers.
In 2012, Zuckerberg visited Moscow for a meeting with Prime Minister
Dmitry Medvedev, at which, among other things, political aspects
of Facebook activity were discussed.

However, in September 2013, Russia’s telecommunications regulator
Roskomnadzor accused Facebook of advertising smoking blends which caused
an effect similar to that of illegal drugs and threatened
to block Facebook in Russia. Facebook complied in withdrawing
this content and the social network escaped further action.
On an earlier occasion Facebook had agreed to remove content
related to suicide from its site.

Facebook also has agreed to share its users’ public data with Yandex.
The deal gives Yandex full access to public data from users
in Russia, Turkey and the CIS countries, including Ukraine, Belarus and
Kazakhstan.

While further progress represents a challenge, Facebook is likely
to keep hold of its niche on the Russian market —
a young, urban audience interested in communicating with friends and
acquaintances abroad. All else aside, the Russian government has a vested
interest in allowing the country’s young professionals, including
scientists and IT specialists, to stay in touch with their peers
abroad, thus exchanging experience and maintaining not only personal, but also
professional ties which could serve Russia well in the future.